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Highlights from oral arguments in Bilski v. Kappos

November 11, 2009

Post by Blog Staff

On Monday, the Supreme Court heard oral argument in Bilski v. Kappos in an effort to determine the proper test to be applied to determine whether a claim is patentable subject matter under § 101. The oral argument transcript is available from the Court's website here.

Click below for our thoughts on the arguments and some of the more interesting quotes from the Justices' questioning.

From the outset, little time was given to analyzing the patentability of the business method claims in Bilski's application and it appears likely that the Court will rule against Bilski's claims. Rather the vast majority of arguments were spent attempting to craft a reasonable standard to determine patent eligible subject matter. Jakes asserted that the Federal Circuit's test was too rigid and valued form over substance. In particular, Jakes argued that the test should be whether there is a "practical application of a useful result" that involves "physical steps". The remainder of Jakes time was spent in the labyrinth that is patent eligible subject matter. The Justices peppered Jakes with hypotheticals ranging from a process for keeping "80% of students awake" to "insights into the best way to train horses."What became apparent throughout oral arguments is the problem of conflation of the § 101 issues from § 102/§ 103 issues. For instance, Chief Justice Roberts observed that claim 1 of the Bilski application was a "classic commodity hedging going that has been going on for centuries." The distinction between § 101 and §§ 102-103 was highlighted by the Supreme Court's newest addition, Justice Sotomayor. Malcom Stewart of the Solicitor General's office, arguing for the USPTO, made reference to the fact that the hedging method claimed by Bilski was "in no sense different in kind from risk management techniques that have been undertaken for centuries." Justice Sotomayor quickly pointed out that this went back to § 102 and § 103, the "standard weeding mechanisms for [a] patent."Stewart at times shied away from embracing the Federal Circuit's machine-or-transformation as the exclusive test and seemingly urged the court to decide the case narrowly, i.e., that Bilski's claimed method was not patentable. Chief Justice Roberts stated that the test might allow insignificant use of a machine to be patentable, seemingly placing substance over form, whereas Justice Stevens suggested that the question should instead be whether the new process is patentable apart from the machine. Justice Sotomayor was active throughout the oral argument. She affirmatively stated that the ruling in this case would be limited to statutory limitation of "process" and thus would not overrule State Street (which dealt with a claim to a machine):

JUSTICE SOTOMAYOR: No ruling in this case is going to change State Street. It wasn't looking at process or the meaning of "process." It was looking at something else.Transcript, p. 30, ll. 1-4. In one exchange, Justice Sotomayor argued that patents regarding how information is exchanged would limit the free flow of information, in that it requires licensing fees and other legal steps. J. Michael Jakes, arguing for Bilski, pointed out the disclosure requirement of the patent laws and that this requirement promotes the free flow of information in exchange for a limited exclusive right:JUSTICE SOTOMAYOR: But a patent limits the free flow of information. It requires licensing fees and other steps, legal steps. So you can't argue that your definition is improving the free flow of information.MR. JAKES: Your Honor, I would, because of the disclosure requirement of the patent laws. It requires people to disclose their inventions rather than keeping them secret, so there is a second benefit to the patent system just other than encouraging people to invent, and that is to have that information get to the public generally.

Transcript, p. 14, ll. 5-16. Justice Stevens insightfully sought to determine the meaning of "process" when the 1952 Patent Act was enacted by asking about its primary drafter, Judge Rich:

JUSTICE STEVENS: May I ask this general question, too? I have always admired Judge Rich, who was very active in drafting the '52 amendments.MR. JAKES: Yes.JUSTICE STEVENS: Has he written anything on this particular issue.MR. JAKES: He has written a number of things. And I think one of the things that the Solicitor General quotes in their brief is from an article that he wrote. But he also wrote the Alapatt decision and the State Street Bank case as well. And those I think, stand as his views, his latest views on what was patent-eligible subject matter, looking at the State Street Bank case.

Transcript, p. 17, ll. 8-22. Justice Sotomayor also expressed interest in determining the intent of Congress in 1952 when "process" was added to § 101.All in all, the Justices struggled with the machine-or-transformation test and seemed uncomfortable with the question of whether it is overinclusive and/or underinclusive. The Chief Justice took issue with the idea that a claim may meet the test simply by adding a computer to the process, which arguably was the situation in State Street Bank:

CHIEF JUSTICE ROBERTS: Mr. Stewart, I thought I understood your argument up until the very last footnote in your brief. And you say this is not -simply the method isn't patentable because it doesn't involve a machine. But then you say but it might be if you use a computer to identify the parties that you are setting a price between and if you used a microprocessor to calculate the price. That's like saying if you use a typewriter to type out the -- the process then it is patentable. I -- I -- it -- that takes away everything that you spent 53 pages establishing.. . . CHIEF JUSTICE ROBERTS: But if you look at your footnote, that involves the most tangential and insignificant use of a machine. And yet you say that might be enough to take something from patentability to not patentable.MR. STEWART: And all we've said is that it might be enough; that is, hard questions will arise down the road as to where do you draw the line, to what extent must the machine or the transformation be central -CHIEF JUSTICE ROBERTS: So you think it's a hard question. If you develop a process that says look to the historical averages of oil consumption over a certain period and divide it by 2, that process would not be patentable. But if you say use a calculator, then it -- then it is?

Transcript, p. 33, ll 8-18; p. 35, ll. 3-18. Although the Justices did not seem satisfied with the Federal Circuit's test, there was also some probing regarding some of the alternative tests proposed by amici, such as the "technological arts" test, which was also proposed in Judge Mayer's dissent from the Federal Circuit's decision. Justice Ginsberg, for instance, seemed keen on the "technological arts" standard used by European countries:

MR. JAKES: . . . There is nothing in the useful arts -- now, we have heard the word "technology." That can be a difficult term, because technology in its broadest sense means the application of knowledge as opposed to general knowledge.JUSTICE GINSBURG: Isn't that the basis on which the patent law rests in Europe, in other countries? They do not permit business method patents. It has to be tied to technology, to science or technology. So if other systems are able to work with the notion of technology-based, why not ours?MR. JAKES: I would agree, Your Honor. There are those systems that do have a requirement like that. Ours does not.. . .JUSTICE GINSBURG: You did -- and if you read Judge Mayer's opinion, it has a simplicity to it. It says, if it's technology, then its within the realm of patent, an

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